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Supporters urge ‘truth in lending’ disclosure for small-business financing in HB 693 hearing; industry pushes alternative disclosure model
Summary
The Economic Matters Committee heard testimony on HB 693, a ‘Small Business Truth in Lending’ bill that would require APR and related disclosures for many commercial financing products. Supporters — banks, community lenders and small-business advocates — said transparency would prevent high-cost loans from trapping entrepreneurs. Industry groups
The House Economic Matters Committee heard House Bill 693, a proposal to require expanded disclosure for many small‑business financing products, including an estimated annual percentage rate (APR) and related payment information.
Supporters included community lenders, civil-rights and small‑business organizations and a range of business owners who described experiences with short‑term, high‑cost financing products that can leave enterprises unable to recover. Kaylee Locklear of the Maryland Retailers Alliance described a member who took high‑cost financing that ultimately contributed to the business’s failure.
“Common sense APR disclosure for small business financing is supported by the FTC, small business groups, the banks, for profit fintech lenders, non profit civil rights and community groups,” Locklear said in testimony supporting the bill.
Nonprofit lenders, CDFIs and trade groups also testified in favor. Joshua Miller of the Opportunity Fund and a speaker from the National Community Reinvestment Coalition said lack of transparency disproportionately harms Black and Hispanic entrepreneurs; Opportunity Fund witnesses reported APRs in sample contracts averaging roughly 94% and in some cases exceeding 300%.
Industry witnesses and trade associations representing nonbank financing providers opposed the bill’s APR requirement and urged the committee to adopt a different disclosure model—the “total cost of capital” or flat‑dollar disclosure—arguing APR is not an appropriate metric for flexible, revenue‑based or short‑term commercial financing products. They pointed to seven states that have chosen alternative disclosure regimes and urged Maryland to align with neighboring Virginia’s disclosure model.
Representatives from the Innovative Lending Platform Association, the Revenue Based Finance Coalition and several finance companies said APR can be misleading for products without fixed terms or fixed amortization schedules and argued that total cost of capital gives businesses a clear dollar‑figure comparison. Industry witnesses also stressed that banks are exempt and that some business borrowers have alternative financing options.
Committee members pressed both sides about real-world examples, whether APR calculations can be accurate for short-term products, and how disclosures would affect access to capital. Witnesses for proponents said disclosure tools and compliance software are available and that California and New York have implemented APR requirements without major market exits; opponents said APR can produce misleading, inflated figures for short-term products.
The hearing record shows broad agreement that small businesses need clearer information about financing costs; the parties disagree on the best standard. The committee did not record a final vote and asked for further follow-up on implementation and practical disclosure formats.
